Newly released, Giving USA 2020: The Annual Report on Philanthropy for the Year 2019 shares findings about philanthropy in 2019 that can provide insights and background information about the state of philanthropy before the COVID-19 pandemic hit.
How much was given?
Total giving in 2019 was $449.64 billion, increasing 4.2 percent (in current dollars) and 2.4 percent when adjusted for inflation. “Philanthropy had solid, healthy growth in 2019,” statistician Jon Bergdoll explained. “After remarkable growth in 2017 and a slight dip in 2018, giving in 2019 nearly caught up to 2017 in inflation-adjusted terms.
“The three highest years for philanthropy were the last three years, in both real and nominal terms.”
Giving by sources
How did individuals, bequests, corporations, and foundations give compared to previous years?
Giving by individuals increased 4.7 percent (2.8 percent adjusted for inflation) in 2019, while giving by bequest was essentially flat, increasing 0.2 percent (-1.6 percent adjusted for inflation).
Giving by corporations increased 13.4 percent (11.4 percent adjusted for inflation). While a large increase, Bergdoll explained that corporate giving is only 5 percent of the total amount of U.S. philanthropic giving, so what appears to be a big rise in the rate of growth for corporate giving amounted to approximately $2.5 billion, well under 1 percent of total giving.
Giving by foundations increased 2.5 percent (0.7 percent adjusted for inflation). Fifteen years ago, giving by foundations comprised approximately 11 percent of total charitable giving. In 2019, giving by foundations rose to 17 percent of total charitable giving.
Highlights of giving to subsectors
Bergdoll highlighted several of the noticeable increases in giving to several subsectors:
“Education had a pretty robust year. Generally, giving to education and the arts are tied to good times. When the economy is doing well and people have spare money, they tend to give to those subsectors. 2019 saw extreme growth in the S&P 500, so it wasn’t too surprising to see increased giving to education and the arts.”
He also noted that giving to foundations remained relatively stable, which in and of itself is a significant development.
“In 2017, giving to foundations increased by almost 26 percent, or $10 billion, in real terms,” he said. “That was a huge increase, and usually, when we see a large spike, giving to that subsector might decrease the next year.
“However, giving to foundations decreased slightly in 2018, and grew slightly in 2019. It’s not at the same level that it was in 2017, but that fact that it hasn’t significantly decreased despite the large spike is quite telling.
“It shows that foundations are becoming more and more of a significant player in philanthropy.”
Giving to the public-society benefit subsector, which includes organizations such as United Way and commercial donor advised fund (DAF) holders, e.g. Fidelity Charitable, Schwab Charitable, and Vanguard Charitable, grew a substantial amount during 2019.
Bergdoll indicated that 2019 may have been a “catch-up” year for the subsector, as it noted a slight dip in total dollars in 2018. In addition, commercial DAFs typically see more in donations than they grant out. With a healthy economy in 2019, donors may have given more to their DAFs, which may be another reason for the large growth in giving to public society benefit.
Significance of findings
While one might question the importance of studying charitable giving in 2019 when a global pandemic and a resulting economic downturn will likely have a large impact on giving in 2020, Bergdoll said that it’s vital to understanding where the nonprofit sector was situated heading into the crisis:
“We were coming off of a pretty strong, three-year run of a relatively rapid increase in giving. It took only two years for philanthropy to get to the $450 billion mark after it passed the $400 billion mark in 2017.
“It’s worthwhile to know that even in an economic downturn, philanthropy won’t decrease all the way to $0. People will continue to give, even though total dollars given will most likely decline. If it does, it will decline from where it’s currently at, which is basically the highest it’s ever been.”
Bergdoll also explained that understanding past editions and numbers of Giving USA can provide context for the current year.
“This is a unique scenario we’re currently in,” he said. “We can’t go back and study years that were just like it, but we can look at where we stood 15 years ago, or 13 years ago on the brink of the last recession. You can look at those numbers and see how things have changed and how philanthropy might recover. It won’t be an exact comparison, but it could produce some useful insights moving forward.”
Bergdoll added that while individual giving has dipped slightly as a percentage in comparison to the rest of the charitable giving “pie,” more and more giving is coming from a smaller portion of individuals.
“Philanthropy has become more reliant on the upper-income households and the wealthy,” he said. “When it comes to economic downturns and recessions, high net worth households can bounce back faster than middle- and lower-income households. If we do enter into another recession, the wealthy may be able to recover the fastest and provide increasing support to nonprofits moving forward.”
However, Bergdoll stated that it’s difficult to make predictions about charitable giving in 2020. Rather, he said that using previous research and knowledge about trends can help nonprofit organizations possibly understand where their philanthropy, in comparison to the sector as a whole, might be in coming years, while noting that the global pandemic has had an impact unlike any other disaster or recession in history.
“We don’t know for sure how people will respond, or what philanthropy will look like this year,” Bergdoll said. “We do know though, that whatever happens to philanthropy this year will be based on relatively strong giving during 2019.”